Traders and analysts are currently bullish on gold for the coming year. Forecasts indicate that the yellow metal will reach £1,200 – £1,300 per troy ounce during the course of 2017 and upwards of £2,000 during the next 36 months. Gold will continue to be seen as a “fear asset” in 2017, and as Trump’s presidency begins, uncertainty is certain to make itself known.
A HISTORIC GLOBAL CURRENCY
Gold has been traded as a form of currency for thousands of years. Seventeenth-century goldsmiths were responsible for creating the banking industry, as we know it today. Gold’s rarity and adaptability have led to this precious metal becoming a tradeable currency throughout the world, making it the ultimate store of wealth. Central banks and countries are duty-bound to hold a certain percentage of their wealth in gold, in order to protect themselves from financial risk.
A POWERFUL ASSET FOR THE FUTURE
Gold is a great investment for the long term and remains the best performing asset of the 21st century, with an average return of 15% a year, over the last ten years. The price of gold is currently at a low similar to that of the close of last year, so it makes sense to invest now. Even central banks around the world are stocking up on gold while the price is down, believing it to be an opportune time to buy. Gold investment is an excellent way to protect your wealth for the future and now you can insure more of your savings for less.
SO WHAT ARE THE REASONS TO BUY GOLD
Around the world economies are being shaken by a profusion of financial, political and geopolitical crises and conflicts. From the war in Syria and the fight against terrorism to the rise of Donald Trump and Brexit – uncertainty has a negative impact on the price of commonly held assets, like shares. People are reluctant to invest in intangible assets they cannot see and touch. Physical gold has always been a safe haven asset that tends to increase in value, as more and more people insure their wealth against financial risk.
COMPARED TO SAVINGS
Saving accounts are currently offering under 1% interest and many of them are in a precarious situation, with regard to capital adequacy rules (the amount of capital a bank or financial institution is required to hold). In recent months, investments in physical gold and silver have been steadily picking up, as central banks and individuals buy the precious metals at dipped prices. There are so many uncertainties in our economic and political landscape, investing in gold is a tried and tested, tax-efficient way to protect and grow your wealth.
COMPARED TO PROPERTY
The introduction of new stamp duty taxes and taxes on buy-to-let investments will make property investment less and less profitable. The fear is that landlords, who are no longer making good money from their buy-to-let properties, will start to sell en masse, reducing the value of property. Furthermore, as interest rates rise, the cost of borrowing will increase, preventing many people from buying.
COMPARED TO BONDS
Equities are at an all time high and in light of the current market uncertainties, there seem to be more potential risks than gains. Some bonds will offer a good return but they also tend to reflect the risks in the market. For example, Greek bonds are paying up to 9% but would you take the risk? Many bonds also lock you in for a long period of time, which means access to your money is restricted. Gold by comparison is very easy to liquidate.
We all have to pay tax on our income, including any gains we make on investments; such as savings, equities, bonds and property but physical gold is an exception. When you invest in tax-free gold you can legitimately avoid paying tax on your gains. It’s a very similar product to an ISA but with none of the restrictions or penalties on early liquidation. Furthermore, you are able to keep and control you investment. Many people use physical gold as an efficient form of tax planning, to minimise inheritance tax too.
Between the unprecedented events surrounding the Trump presidency and the continued uncertainty around the UK’s Brexit plans, the Anglo-American economic climate is set for a turbulent year. Elsewhere the Eurozone is struggling with the impending Italian banking crisis, the conflicts in the Middle East continue unabated and corruption scandals are sweeping across the Brazilian and Korean governments. Whether investing to sell or to secure your finances against potential instability, there’s never been a better time to invest in physical assets like gold.